Illinois joined the ranks of many states that have limited the use of restrictive covenants (e.g., non-competition and non-solicitation agreements) as its recent amendment to the Freedom to Work Act (the "Act") took effect last month. The legislation, Illinois Senate Bill 672 ("SB 672" or the "Amendment"), imposes additional restrictions on employers' use and enforcement of non-competition and non-solicitation covenants. SB 672, which was passed in August of 2021 and took effect on January 1, 2022, clarifies ambiguities in the original Act and imposes additional requirements on Illinois employers seeking to use and enforce restrictive covenants.
Illinois' move places it among several other states that ban or limit restrictive covenants, which include California, North Dakota, Montana, Oklahoma, as well as Washington D.C. Other states, including Massachusetts, Colorado, and Oregon, impose restrictions on non-competition and non-solicitation agreements. Restrictions on competition also face increased scrutiny under the Biden Administration, which issued a July 9, 2021 Executive Order encouraging the FTC to limit non-compete agreements, among other things. Illinois' recent Amendment follows in this pro-competition trend.
Under the original Act, employers were prohibited from requiring "low-wage employees" to enter into "covenants not to compete." The original Act did not specify whether this restriction extended to non-solicitation agreements. SB 672 addresses this ambiguity...
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